Merchants Caught Up in Risky Business

 

 

 

Merchants Caught Up in Risky Business

How To: Avoid Risk Holds

 Chosen Payments has recently seen an escalation in actions taken by the Risk Management departments of banks that provide funding for merchant transactions. These actions include delays in approving new merchant accounts as well as holding up transaction funds deemed by the bank to be suspicious in nature.

Behind the Scenes

Before we share some tips on how to avoid having your funds delayed, we will provide a brief education about the relationship between Chosen Payments, the funding bank and your Merchant Account. In order to provide overnight funds, Chosen Payments engages with a partner bank (funding bank) that agrees to provide funds to you immediately on behalf of the bank that issued your customer’s credit card. Let’s say your customer uses a Wells Fargo Visa to make a $10,000 purchase. Our funding bank provides the $10,000 into your Merchant Account overnight and then contacts Wells Fargo to ask for reimbursement for the amount they advanced to you. As a result of this relationship, the funding bank owns and manages the risk of every single transaction they process. This is important to note as Chosen Payments has no control over risk holds or delays in funding except to serve as your advocate based upon what we know about you, your business and our history of doing business together with you.

Read more ...

You Got All the Card Information – You Still Fell Victim of Fraud – Why?

 

 

 

You Got All the Card Information – You Still Fell Victim of Fraud – Why?

 

Credit card fraud is at an all-time high. Statistics say that online fraud is up more than 750% from where we were just one year ago today. With more and more companies utilizing eCommerce, thieves are looking to use eCommerce too as a way to steal from you.

 

We recently saw an erroneous comment on social media from someone who admonished merchants to always get the credit card number, the 3-digit security code, the expiration date and the billing address and you will be safe from fraud. Nothing could be further from the truth. Thieves can obtain that same information from a variety of methods and use it later in fraudulent transactions.

 

The Skimmer

 A credit card skimmer can easily capture all of the data from your credit card. In fact, the magnetic stripe is loaded with personal information that may include much more than just the credit card data. It includes the billing address of the card and some even carry such personal data as your date of birth. Skimmers are most commonly used at gas stations. They are easy to insert into the pump credit card reader and you likely won’t even know that your card has been compromised. Thieves capture your data from the skimmers on Bluetooth devices and don’t even need to get out of their car to do it.

 

The Hacker

Hackers are constantly trying to penetrate large servers that store credit card data. Examples of recent victims are Chipotle, Marriott, Target and most recently Click2Gov, an online portal that many city municipalities use for processing tax and license payments. Once thieves successfully breach a system, the thieves have access to thousands of cards along with the full data. It’s not just through data breaches that cyber thieves can steal credit card information. Cyber thieves are also using a strategy called “formjacking” where malicious code is used to steal credit card details during the checkout process on eCommerce sites. This type of fraud is on the rise, with reported attacks affecting major sites such as Ticketmaster and British Airways.

Read more ...

The Game of Family Fraud

 

 

 

The Game of Family Fraud

 

More than 120,000 small to medium size businesses experienced internal credit card fraud in 2018 that is referred to as “friendly fraud” or “family fraud”. The words fraud, friendly and family don’t seem to go together. “Friendly fraud” is committed by someone you are friendly with or perhaps an employee that you consider to be “family”.

 

How it Happens

In the simplest version, your employee issues a credit from your bank account that goes to their own personal credit card to pay down their own personal balance. In most cases, we find that merchants seldom question credits, returns or voids that occur within a typical business day. Both credits and voids are frequently used to commit fraud against employers and may go undetected for a long time. We will share methods you can use to prevent product loss as well as the theft of money from your bank account. In the most common fraud scheme we see, an employee says that a customer called in with a complaint and in an effort to resolve the issue, your trusted employee issued a refund to make the customer happy. This likely would seem completely normal. The other method of friendly fraud occurs when your employee completes a transaction and then voids the sale as if it never happened. Their friend walks out of your business with a load of merchandise that was paid for as they left and then the transaction is erased while you sustain an unknown loss.

 

Monitoring Credits/Returns

When an employee issues any type of credit, discount or adjustment that posts to a credit card, you need to compare the credit card number on the original sale to the credit card number receiving the credit. This isn’t just a good business practice, it is a requirement by the card brands. Always verify the last 5 digits of the card being refunded are exactly the same as in the original sale. Any type of refund or credit should be accompanied by a simple form of written documentation summarizing the original date and charge, the return/credit information and a written statement about what caused the adjustment. This form should require two signatures including the person initiating the credit and another employee who verifies the card digits and the purpose of the credit issued. If there is a claim that no other employee was available at the time the credit was issued, due diligence should be exercised in verifying all details of the specific transaction.

Read more ...

The Role of Your Credit Card Processor

 

 

The Role of Your Credit Card Processor

 

Whether you pay your credit card processor one lump sum at the end of the month or have a little amount deducted from each daily batch of transactions, you are paying for a service. But, what exactly are you paying for? Your credit card processor is merely one component of completing your transactions. There is a vast and complex network of companies involved in every transaction and your processor manages the process between all of the companies involved. In a nutshell, your processor represents your business with each of the card brands you accept such as Visa, MasterCard and American Express.

The Magic Behind the Scenes

When you accept a credit card there are a number of steps that place for the money to be deposited into your bank account. While the steps vary slightly based on the type of card, the steps involved start with capturing the card information. This can be done manually, through a website shopping cart, a POS system, or a terminal with a chip or stripe reader. The card data, along with your business information and the information about the specific transaction is sent to an Acquiring Bank such as First Data. The Acquiring Bank sends the information to the card brand (Visa, MasterCard etc.) who then checks with the specific Card Issuing Bank (Wells Fargo, Capital One, Bank of America, etc.) to see if there is enough available credit on the account. Assuming the funds are available, the Card Issuing Bank holds the funds required for your business.

Read more ...